Imagine if the post-war recovery in Iraq had been implemented differently. Imagine if Iraq had been reconstructed successful? Would Syria look different today — would the Islamic State even exist? Would the terrorist threat be lessened?

It’s the Economy…

These questions highlight the old adage used by Bill Clinton, “It’s the economy, stupid.” It is a fundamental truth often ignored in the public debate on how to tackle geopolitical instability: Economic development is key to post-war recovery and the return of stability to economies. The same applies for general development efforts. And private sector involvement is essential to economic development; it is the main driver of poverty alleviation.

When looking at capital flows from OECD to non-OECD economies, over half the capital flows pass through the private sector, around a third through remittances, and the balance through official aid and philanthropy.

Even though the private sector is the key driver of growth — so critical to stability — it plays little role in post-conflict recovery or development planning. Perhaps ironically, the smallest set of stakeholders — aid and philanthropy groups — is often seen as the main driver of reconstruction and granted a big seat at the planning table.

It is time to change the balance of importance given to aid and private sector stakeholders and to recognise where the key engine of growth is.

If you are a subscriber click here to login and read the complete article.  For more information about the JSFB click here  or contact us to learn more about Cornerstone’s research and service offering.

Andrew MacLeod is a former high-level UN official who has in the past negotiated humanitarian access guarantees with fundamentalist and conservative Islamic groups. He is a visiting professor to Kings College London and an Executive Board member of Cornerstone Capital.